Delta reworks deal for MN jobs and headquarters

6:21 PM, Dec 16, 2008   |    comments
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MINNEAPOLIS -- Northwest Airlines would get out of its agreement to keep its headquarters here under a tentative agreement between the Minneapolis airport and Northwest's new corporate parent, Delta Air Lines. Under the agreement Delta would eventually pay as much as an additional $1 million per year in rent and promise to keep jobs and flights here at close to current levels, airport spokesman Patrick Hogan said. Agreements dating to 1992 gave the Metropolitan Airports Commission the power to demand immediate repayment of some $245 million in bonds it issued on Northwest's behalf, if the airline broke its promise to keep a headquarters here. The commission could also have revoked a rent reduction worth $1.9 million per year along with as much as $10 million per year in revenue-sharing from the sale of items like food and parking. Portions of the agreements were negotiated as recently as last year, while Northwest reorganized under bankruptcy protection. The agreement has been politically touchy in Minnesota, where some believed Northwest was trying to wriggle out of promises it made in the early 1990s, when it needed state help. Atlanta-based Delta Air Lines Inc. closed its purchase of Northwest on Oct. 29. In exchange for getting out of Northwest's agreements, Delta would pay an extra $500,000 per year in rent through 2014, and a total of $1 million per year extra in rent until its lease expires in 2020. It gets to keep all of the concession money, which runs $8 million to $10 million per year, Hogan said. The agreement calls for Delta to keep its "Delta North" headquarters here, as well as at least 10,000 jobs, a drop of about 1,500 from current levels. It also requires Delta to maintain 400 flights a day at the Minneapolis-St. Paul International Airport, which is slightly below the level it currently flies. The agreement also has Delta overseeing its regional carriers from here, and moving Northwest's Compass regional subsidiary to Minnesota from Virginia. Another regional subsidiary, Mesaba, would stay here. Hogan said the agreement did not address Delta regional subsidiary Comair, which is based in Erlanger, Ky., near Cincinnati. Reservation centers in Chisholm, Minn., and Bloomington, Minn., would also stay, Hogan said. Delta also agreed to pay off the airport-backed bonds by 2016 instead of 2022. The promise of 10,000 jobs lasts until the bonds are paid off. Assurances to keep specific jobs in Minnesota, such as reservations centers, run for only three years. After that, if Delta no longer needs the service, or if they outsource it, the agreement allows Delta to replace those jobs with others paying similar salaries. "What we were trying to do was to protect jobs, and to make sure that there were good jobs among them," Hogan said. The agreement still needs approval from the Metropolitan Airports Commission. Hogan said he hopes it will be approved next month. Delta is also fleshing out plans to integrate Northwest's fleet, according to a Monday memo from Bob Cortelyou, Delta's senior vice president for network planning. For instance, beginning in April it will use its Boeing 767s to fly from Minneapolis to Paris, and put the Northwest A330s that used to fly that route on Atlanta-London Gatwick. Other changes include using the 767 to replace A330s on Amsterdam-Mumbai, Detroit-London-Heathrow, and Newark-Amsterdam. Delta will put Northwest's A330s on flights from Atlanta to Amsterdam and Rome, and from New York-JFK to Athens. In May it will fly a Northwest 747 from Atlanta to Tokyo-Narita once daily, along with Delta's existing 777 service on the route. Delta shares rose 36 cents, or 3.4 percent, to $10.99 in afternoon trading.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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